Paul Armitage, Huw Evans and Brian Smith, of Pace Financial Management, have been fined a total of £49,000 for failing to have appropriate systems and controls in place.
The FSA says the trio failed to effectively supervise other partners at the firm – as well as its team of brokers – and adequately check client files between July 2003 and December 2007.
Their incompetence enabled a fourth, unnamed, partner to carry out financial crime with a mortgage adviser, again unnamed, working for Pace.
The anonymous partner, who has since left the firm, has been convicted of fraud-related offences but, because the FSA was not involved in the investigation, it will not divulge further details.
Meanwhile, the unnamed broker was later hired by investment specialists Belmont Regency where he was eventually arrested and, in March this year, convicted of 15 fraud-related offences connected to his time at Pace.
The FSA stresses no financial crime was committed while the broker was at Belmont, but the company would have faced a £17,500 fine for hiring a “dishonest” adviser if the charge would not have placed it in financial difficulty.
While assessing Belmont, the regulator also expressed concerns about the firm’s ability to ensure the suitability of its advice. It found, in some cases, it failed to adequately record and update customer information.
Margaret Cole, FSA director of enforcement and financial crime, says: “By lacking the essential systems and controls to meet the FSA’s standards, Pace put itself at risk of financial crime, and this was taken advantage of by two dishonest and unscrupulous employees.
“The Belmont case illustrates the importance of stringent vetting procedures, as the firm took on an adviser that had already committed financial crime and could have done so at Belmont.”
